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The best results will come from using DV-AVIs as your source files. Not VOBs or MPEGs.
Converting the files (using a program like VirtualDubMOD or MPEG Streamclip) will likely stitch the clips together so that the gaps between them won't show.
Paul offers this method of combining the VOBs:
A more common workflow is to do all editing (Audio & Video) in your NLE (PE3, in your case) and then Export as DVD-compliant MPEG-2. These Exported files are then brought into DVDShrink to compact them even more. Other software is then used to do the Burn, i.e. ImgBurn from the DVDShrink .VOB's. Might be worth a test.
Thanks for all the advice. I'm going to try them out asap